Save Article

The Economic Headwinds Obama Set in Motion

A booming recovery would force the Treasury and Fed to compete with the private sector for credit.

By

Phil Gramm and

Thomas R. Saving

May 17, 2017 6:51 p.m. ET

Behind every significant postwar recovery has been the same driving force: a sustained rise in private investment and new home building, which increased borrowing and drove up interest rates. In most cases the economy had sufficient momentum to overcome those rising interest rates. But the unparalleled borrowing and monetary stimulus under President Obama may have changed the equation. Now rising interest rates in a full-blown recovery would require the Treasury Department and the Federal Reserve to compete for available credit...